Two counties in the State of Iowa have participated in two-year experiment involving a capitation method of reimbursement for the Medicaid Drug Program. It has been hypothesized that, as a result of the incentives involved with prepayment, the pharmacist will change his/her behavior in order to lower drug costs. Preliminary results have shown this to be particularly true regarding the pharmacists' drug product selection habits. It is the objective of this research to determine whether non-Medicaid patients were beneficiaries of the pharmacists' newly acquired cost containing attitudes toward Medicaid patients. Since the "Capitation Study" has focused exlcusively on Medicaid cost reduction, it cannot answer questions conerning the effect of the capitation method of payment on non-mMedicad prescriptions. The proposed study is designed to fill the gap left by the "Capitation Study" by focusing on the spill-over effect of the capitation method of payment. More specifically we propose to study the rate of generic substitution for non-Medicaid prescriptions. The study will involve a cluster sampling of prescriptions in each pharmacy in the two experimental counties as well as the two control counties (a total of 22 pharmacies). The time period of analysis is three years: six months before, two years during and six months after the capitation program. The analysis will compare the extent of generic substitution for non-Medicaid prescriptions in terms of percentage and dollar savings between experimental and control pharmacies before, during and after the program. The proportion of generic substitutions involving drugs under the MAC regulations will also be analyzed.